Beginner's Guide To Stockcharts.com: Annotating Charts
The ability to annotate charts is likely the most appealing feature for prospective users of the site. There are hosts of options available for marking up charts, including the ability to draw several different line types, insert text and add shapes such as boxes, circles and arrows. There are also advanced line studies such as Fibonacci and regression study tools. Annotating is available in as both a flash and java applet. (For related reading, see Top 4 Fibonacci Retracement Mistakes To Avoid.)
(*Free users will not be able to save and store annotations)
Figure 4: Annotating Charts
Next to the annotate link, users will also find links for printing and sharing charts. Clicking print allows a user to print their chart (monochrome is an option for printing in black and white). Clicking "share" allows a user to email the chart, share to InvestorsHub, Tweet on Chart.ly, post using your twitter account or share on Facebook. Clicking "linkable version" allows a user to create a custom URL for a specific chart.
Useful Charting Techniques
With the ability to create so many different chart types, the Sharpchart engine allows users to create some very useful charts. However, beyond the basic charting of equities, there are many other powerful ways to use Sharpcharts. Some advanced techniques include the ability to create ratio charts and create charts to track breadth indicators.
One little-known charting technique available on stockcharts.com is the ability to create ratio charts. To create a ratio chart, users can simply enter two tickers separated by a colon. What is represented is a ratio chart of the two stocks' performance against each other. While at first glance, it may seem that a ratio chart has little use, there are many useful ways to use them. For instance, ratio charts can be used to track market correlations, such as gold to stock, large cap to small cap, stocks to bonds and even individual stocks to each other.
Below is a chart representing a ratio chart of the smallcap and largecap sectors. For this chart, we chose the popular ETF's, DIA and IWM, to represent the groups. Notice how small caps were underperforming through the end of 2011 as the market pulled back. Smallcaps started to outperform early in 2012, hinting at underlying strength, which led to a market rally through the first quarter. (For related reading, see Valuing Large-Cap Stocks.)
Figure 5: IWM: DIA
Tip: stockcharts.com allows you to display a ticker as an indicator. Simply select price and enter the ticker.
While the vast majority of Sharpchart users create charts of equities, stockcharts.com also allows the ability to chart several breadth indicators. Examples of breadth indicators include the NYSE Advance/Decline line, The High/Low Index, and lesser known indicators such as the percentage of S&P 500 stocks trading below their 50-day moving average. (For related reading, see Absolute-Breadth Index and the Ulcer Index.)
Below is a chart showing the percent of NYSE stocks trading above their 50-day moving average. This indicator is helpful in identifying periods when the market is getting overbought or oversold as measured by individual stocks and their relation to the popular moving average.
Also on the chart is an example of how a user can display a ticker as an indicator in the price panel. In this case we are overlaying the S&P500 ($SPX) to show both the breadth indicator and the index in the same chart.
Figure 6: NYSE
Charts, Charts and more Charts
At its core, stockcharts.com is a charting site. The Sharpchart is a primary draw for most users, and the site definitely boasts some of the most advanced charting available online.
As mentioned before, the site also generates some of the most professional and appealing charts on any platform. It is no surprise that the financial industry is littered with so many charts derived from the site. While the Sharpchart is definitely the star of the site, it merely scratches the surface of what the site has to offer. The site also offers a vast array of other charting tools, such as Perfcharts, P&F, Ticker clouds and carpet charts. (For related reading, see Introduction To Swing Charting.)
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